The Nossiter Net
The net that shall enmesh them all
Edited, Written, and Published by Josh Nossiter
A Pentagon Christmas
Tuesday, December 27th, 2005
The Nossiter Net is cast  to snare some of  the riper rascalities of the day.  Comments?  editor@nossiter.net
Santa came to the Pentagon this year disguised as the Grinch.  The New York Times reports that defense contractors are being told to look for lumps of coal in their stockings.  After a healthy increase of over 40% since 9/11, the Pentagon budget won’t grow as fast in the future.  Says Joseph Albaugh (rhymes with trough) of Boeing, it’s “been a great ride for the last five years.”  Sadly, every gravy train eventually reaches a terminus, and for defense contractors their “great ride” may be over. 

Or maybe not. 
The Hill says today that the Pentagon’s 2006 budget request weighs in at $419.3 billion, a 4.8% increase over last year.  That buys a few toys, even if they’re the Navy’s new DD(X) destroyers at one billion dollars each, whose parenthetical (X) stands for eXpensive.  And the budget does not include the cost of the Iraq war.  That item is covered by a $75 billion or more “Supplemental,”  which will push overall military spending to the half-trillion mark or beyond.

When you’ve got half a trillion to spend, why not splurge a little?  Knight-Ridder newspapers did an investigation of the food service items the Pentagon is shopping for these days, and came up with a few gems of reverse bargain hunting.  Twenty dollars for eighty cent ice trays topped the list, along with refrigerators for thirty-two thousand dollars a pop.  Of course that doesn’t sound like much compared with billion dollar ships, but if you overpay for enough small items by a factor of 23, they start to add up.

Or splurge a lot: the Pentagon doesn’t limit its spendthriftiness to small items.  Last January the General Accounting Office published a report listing twenty-five government offices at “high-risk” for waste, fraud, or both.  Eight of the twenty-five belong to the Department of Defense, amounting to annual wastage in the billions of dollars.  Or the hundreds of billions, no one really knows:  so much money washes through the Pentagon that the books are never balanced.

And that is no accident.  In the world of “cost-plus” and no-bid contracts in which the Pentagon lives, the less transparency the better.  The top civilian procurement official at the Pentagon, Bunnatine Greenhouse, blew the whistle on multi-billion dollar fraud and waste in Halliburton’s KBR subsidiary’s Iraq contracts.  She was promptly demoted, and effectively silenced, for her trouble.  Ms. Greenhouse's words, however, will live on:  “"I can unequivocally state that the abuse related to contracts awarded to KBR represents the most blatant and improper contract abuse I have witnessed during the course of my professional career."

But now that the Defense Department is facing a slowing in the rate of growth of its annual budget, and with the prospect of having its allowance stuck around the half-trillion mark for the immediate future, pennies are being watched a tad more carefully.  Soon after the Iraq war began, relatives of troops in combat began spending hundreds of thousands of dollars to send body armor to protect their sons and daughters, brothers and sisters.  The Pentagon, busy with those $20.00 ice trays, apparently didn’t have body armor on the shopping list.  The Pentagon’s spending priorities in this case were sufficiently perverse to arouse even Congress, which passed a law last year requiring that private body armor purchases for combat troops be reimbursed by the DOD.

Today the troops’ relatives are still spending hundreds of thousands to ship body armor to Iraq, but the Pentagon hasn’t paid a penny of reimbursement money.  The Department of Defense didn’t like the idea of reimbursements in the first place, explaining that such payments would create “an unmanageable precedent that will saddle the DOD with an open-ended financial burden.”

Feel better about that half-trillion dollar Pentagon budget, knowing that officials are not only saving on body armor for the troops, but also stalling on reimbursements for the troops’ relatives who buy the stuff themselves?  Of course, hundreds of thousands for body armor isn’t a big deal in a half-trillion dollar budget.  But to paraphrase the immortal Leona Helmsley, a few hundred thousand here, and a few hundred thousand there, and pretty soon you’re talking real savings. 

http://www.nytimes.com/2005/12/27/business/27weapons.html
http://www.hillnews.com/thehill/export/TheHill/Business/020805_pentagon.html
http://www.realcities.com/mld/krwashington/12974270.htm
http://www.washingtonpost.com/wp-dyn/articles/A36544-2005Jan25.html
http://www.msnbc.msn.com/id/9524109/

©Joshua C. Nossiter, 2005
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